Bottom Line: Needing a lift

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CONSIDERING the difficulties facing Simon Engineering, the stock market was generous in its assessment of yesterday's appalling set of results.

The lift equipment maker, storage and plant design group lost pounds 164m last year. It also admitted that it had so far failed to renew banking arrangements and was planning a pounds 50m rights issue. Yet the shares finished the day up 10 per cent at 117p.

Amid the kitchen sinks hurled into the 1993 results was an encouraging reduction in the cost of sales and operating expenses. But even assuming Simon survives - and new-broom chief executive Maurice Dixson shows admirable determination to make sure it does - the continuing businesses do not hold dazzling attractions.

By 1996 it is conceivable that Simon's profits will recover to between pounds 35m and pounds 40m. That puts the shares on a forward multiple of about 10 times earnings per share. Given the problems Simon faces, that seems to be a more than fair discount to the sector.

The risks are high and, without any realistic prospect of a dividend in sight, the rewards are not obvious. Sell.